December EUA prices continued to increase for the second month, driven from longer positions from funds, despite the USA leaving the Paris Agreement.
In addition, the EU emissions trading scheme (EU-ETS) will see changes to the carbon border adjustment mechanism (CBAM). Small importers will no longer be required to report their emissions. Out of 200,000 importers, this affects 180,000, which represent only five per cent of emissions under CBAM. This is expected to avoid any delays.
Furthermore, lower renewable energy production and colder weather led to more gas- and coal-fired generation, adding compliance buying as a bullish factor.
The EUA trading range is seen higher towards EUR74-84/t (US$76.35-86.66/t) while long-term prices for 2030 advanced by EUR7 to EUR95/t.
The front (Dec 25) contract increased by 10 per cent to EUR82 when compared with the level reported in the previous issue of ICR.
Meanwhile, the UK Allowance (UKA) December 2025 price rose sharply to GBP47 (EUR56.50/US$58.09) and is now at a narrow 31 per cent discount compared to the EU-ETS price.
Brannvoll has revised the forecast slightly upwards to a range of EUR65-85 in 2025 with a Dec 25 contract average of EUR75.
By Frank O. Brannvoll, Brannvoll ApS, Denmark
